NCL Director of Health Policy testifies at Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers

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June 16, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, D.C. – On Wednesday, June 15, 2022, the National Consumers League’s Director of Health Policy Jeanette Contreras provided oral testimony to the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers.

In her testimony, Ms. Contreras discussed the importance of consumers having choices for safe goods and services at a fair price, a core principle of NCL’s advocacy work. Touching on several issues impacting consumers in the U.S. – such as the infant formula shortage, consolidation of the airline industry, primary ticketing market for live events, and the unfair business practices of pharmacy benefit managers (PBMs) – Ms. Contreras reiterated the need for competition in the marketplace and enacting stronger antitrust laws, all of which help protect U.S. consumers.

Her testimony appears below.

June 15, 2022

Good afternoon Chairwoman Klobuchar, Ranking Member Lee, and members of the Subcommittee. My name is Jeanette Contreras. I am the Director of Health Policy at the National Consumers League. I appreciate the opportunity to testify remotely today- due to COVID.

Founded in 1899, NCL is America’s oldest consumer advocacy organization. A core principle of our advocacy is that the marketplace should encourage competition to guarantee that consumers have choices for safe goods and services at a fair price. Monopolies harm competition, leaving consumers with fewer options at higher prices. Monopolistic practices are especially harmful when they occur in the health care arena, where they can exacerbate health disparities.

We share the concerns of new parents regarding the recent shortage of infant formula. Our hearts go out to those parents who have lost babies or whose infants suffered devastating health consequences from contaminated formula. At NCL, we believe all goods and services sold to consumers should be safe and meet all legal requirements- including regulatory guidelines set forth by the FDA.

NCL applauds the FDA and the Administration for adopting a multifaceted approach to increase the supply of infant formula, including temporarily allowing foreign manufacturers to sell their products in the U.S. Additionally, we believe invoking the Defense Production Act to prioritize getting needed inputs to infant formula manufacturers was sound policy. These measures are helping to solve the immediate logistical problem of getting formula onto store shelves across the country.

While addressing the immediate formula shortage is most urgent, we are also troubled that it took the FDA almost four months to act on a whistleblower complaint sent to the agency. This complaint should have received immediate attention given the gravity of the allegations against the Abbott facility. We support a full investigation and, if warranted, bringing criminal and civil charges against those who falsified data. NCL also recommends that the U.S. create a single food safety agency and dedicate an office to overseeing the safety and supply of infant formula.

It should concern every American that one manufacturer controls 40% of the U.S. infant formula market. Only three companies — Abbott, Mead Johnson, and Nestle — control 98% of the industry.

Consolidation in the infant formula industry is a major contributor to the current crisis, but it is only one of many cases where market concentration in recent decades has limited competition and harmed consumers.

For example, NCL continues to raise concerns about the consolidation of the airline industry. Due to weak enforcement of existing antitrust laws, from 2005 to 2015, the number of major U.S. airlines declined from nine to four. And today they control more than 80 percent of the domestic U.S. market.

Our antitrust laws have also failed to protect consumers who attend live events. After merging with Ticketmaster in 2010, Live Nation Entertainment controls roughly 80% of the primary ticketing market in the U.S. As anyone who has purchased tickets recently can attest, this has led to an increase in add-fees and the basic price of tickets.

Stronger antitrust enforcement would be especially beneficial for curtailing anti-competitive conduct in the health care industry, where we’ve seen consolidation lead to higher costs for consumers without an increase in quality or access to care. We are pleased that the Biden administration is looking into how hospital prices increase after acquisitions. We are also hopeful that the ongoing review of DOJ & FTC merger enforcement guidelines will result in more action by those agencies.

NCL also applauds the recent FTC decision to open an investigation into the unfair business practices of pharmacy benefit managers or PBMs. NCL works tirelessly to raise awareness of the outsized role that PBMs play in driving up prescription drug prices for consumers. According to a recent report, the three biggest PBMs controlled roughly 77% of all U.S. prescription drug claims in 2020. And a recent Senate Finance Committee report found some PBMs are getting a 70% rebate on insulin, while out-of-pocket costs for this life-saving medication continue to rise.

These cases are just a few examples of how monopolies and anti-competitive practices have become a problem for consumers. To ensure crises like today’s formula shortage do not happen again, market consolidation must be addressed so that the temporary shutdown of a single factory does not result in the collapse of an entire supply chain.

Whether it is baby formula, airline travel, live event tickets, or pharmaceutical sales, the lack of competition is having increasingly negative impacts on consumer welfare and requires urgent action.

Chairwoman Klobuchar, Ranking Member Lee, thank you for holding today’s hearing and inviting NCL to speak about this important issue. I look forward to answering your questions.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

The National Consumers League applauds the FTC’s decision to investigate PBMs

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June 14, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, DC— NCL is deeply concerned by the lack of transparency and accountability surrounding pharmacy benefit managers (PBMs). The pervasive power of PBMs in the pharmaceutical industry has raised out-of-pocket costs for consumers and made it more difficult for them to receive essential medical treatment. NCL believes that the FTC’s investigation into PBMs represents a significant first step to addressing these issues.

The PBM system was originally intended to work on behalf of employers, health plans, labor unions, and states, to negotiate with drug manufacturers and process prescription drug claims. However, as their power and influence in the market has grown, there are major concerns that PBMs have increasingly prioritized profits, with consumers paying the price.

With the highest profit rates of any corporations in the prescription drug supply chain, PBMs have pocketed more than $450 billion in revenue in 2020, a stark $150 billion increase from eight years ago.  More concerning is that now, just three PBMs account for approximately 77 percent of all equivalent prescription claims.

PBMs often demand that drug companies provide them “rebates” or discounts to offer medicines as part of a drug benefit plan. While implemented to lower consumers’ out-of-pocket costs, these theoretical consumer savings seem to be nonexistent. In addition, to increase profits, PBMs intentionally steer consumers to higher-priced drugs, regardless of patient and treatment considerations.

As the most prominent PBMs have vertically integrated with the largest health insurance companies, they are employing monopolistic-like practices to increase prescription prices, limit consumer choice, and stifle market competition. NCL is encouraged that the FTC is taking preliminary action to hold PBMs accountable. In addition to this investigation, policy-makers and the FTC must continue to address the lack of regulatory oversight with the utmost urgency.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

National Consumers League supports the HELP Copays Act to make prescription drugs more affordable for consumers

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June 2, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, DC— The National Consumers League (NCL) is pleased to support the HELP Copays Act (H.R. 5801), introduced by Representatives Donald McEachin (VA-04) and Rodney Davis (IL-13). NCL stands with other aligned stakeholder groups, as part of the All Copays Count Coalition (ACCC), to protect patients from increased out-of-pocket medical costs and ensure that essential and life-saving drugs are readily accessible for all consumers.

NCL’s support of the Help Copays Act follows our organization’s long history of ensuring access to health care and a fair marketplace for consumers in the United States. Across the nation, the cost of drugs vital to patients’ health and wellbeing are unaffordable for many families. This has made co-pay assistance including discounts, coupon cards, vouchers, donations, and more, a key tool for enabling people to pay for their prescriptions. However, recent policies, mainly copay accumulator adjustment programs instituted by health insurance and pharmacy benefit managers (PBMs), block these contributions from patients’ deductibles and out-of-pocket maximums, resulting in more costs for consumers.

The pandemic has only exacerbated consumers’ struggles to afford the medical treatment they need. A recent report by HIV and HEP Policy Institute, discusses how the average family cannot afford to cover the deductibles of their employer-sponsored health plans. The Help Copays Act will require these health insurance plans to count all forms of co-pay assistance towards patients’ out-of-pocket maximums, making essential drugs and treatments more affordable.

NCL supports H.R. 5801 as a solution to reducing the barriers that prevent our nation’s most vulnerable from receiving the medicines they need to maintain and improve health outcomes. According to a survey conducted by the National Hemophilia Foundation, 80 percent of voters support this bipartisan effort to ensure that copay assistance counts towards patients’ deductibles. NCL strongly urges policy-makers to fulfill their obligation to their constituents and support The Help Copays Act as this legislation is an important step in improving access to health care and establishing a fair marketplace for all consumers.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

Jeanette Contreras portrait

How to protect consumers from PBM greed

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By NCL Director of Health Policy Jeanette Contreras

The rising cost of health care is a sore point for all consumers and nowhere is it more glaring than at the pharmacy counter. However, consumers are largely unaware that Pharmacy Benefit Managers – or PBMs – are the middlemen working behind the scenes with very little competition and accountability. There are now just three PBMs that account for about 77% of all equivalent prescription claims. This lack of competition allows PBMs to easily manipulate the price and make it impossible for consumers to get a fair deal.

There is plenty of blame to go around when it comes to the rising cost of prescription drugs. But PBMs ultimately control which medicines we get (and don’t get) and how much we pay out of pocket for them. That’s exactly why the Federal Trade Commission (FTC)– whose mission is to protect consumers and competition – has requested public comments on the ways these large, middlemen companies are affecting drug affordability and access.

I recently led a discussion with key experts to discuss this issue. NCL’s Executive Director Sally Greenberg, Former FTC Policy Director David Balto, and HIV + Hepatitis Policy Institute Executive Director Carl Schmid, shared their insights with us.

David Balto explained, “There are three things needed for a market to really function effectively – you need to have choice (competition); second, transparency – that is you know what you’re getting and what the benefit of the bargain is; and third, that there’s no conflict of interest. In the PBM market, PBMs fail on all three grounds.”

PBMs initially came into existence to streamline how consumers get their medicines and were intended to lower costs. However, as Sally Greenberg pointed out, “The fact that PBMs have the influence and decision-making authority they do should be concerning for all consumers. PBMs have the power to negotiate discounts with drug manufacturers, they work with insurance companies to determine which drugs will ultimately be covered, and they work with pharmacists to reimburse them for dispensing drugs. All along the way, they’ve found ways to profit – and all along the way this impedes the savings that should be going to consumers.”

Carl Schmid shared more about how this impacts patients, “We’re now seeing the creation of specialty drugs or specialty tier (on formularies). This is a term created totally by the PBMs…now it’s just any new drug – all HIV drugs, all Hepatitis drugs, all cancer drugs – they’re all specialty drugs these days and they put them in the highest tier. And this not only creates higher out-of-pocket costs for patients, but it’s also discriminatory.”

These unfair PBM practices lead to unnecessarily high out-of-pocket costs for prescriptions while PBMs continue to find ways to game the system to their benefit. The FTC wants to hear from consumers and patients who have been negatively impacted by these PBM practices.

Watch the full discussion here to learn more about the PBM problem. Then share your story with the FTC here.

The drug pricing middlemen driving up drug costs

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Healthcare continues to be front and center in the national discourse, particularly in the midst of the pandemic. As Congress works on policy solutions to lower healthcare costs for consumers, we face an unfair disadvantage when it comes to what we’re paying at the pharmacy counter.

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Jeanette Contreras portrait

PBMs profit while consumers foot the bill. Policymakers must act

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By NCL Director of Health Policy Jeanette Contreras

As consumers, when we go to the pharmacy for our medications, we expect a fair price. However, there’s growing evidence that pharmacy benefit managers — or PBMs — have been impeding the savings that should be going to consumers. Consumers deserve  to share in the cost savings, and we need policymakers to step in and help make that happen.

We previously wrote about our disappointment in how PBMs have evolved from once honest brokers to becoming profit driven and greedy, now taking savings away from consumers and patients.

One avenue PBMs use to pocket savings is through pharmaceutical rebates. PBMs negotiate with companies to lock in discounts for drugs in order to secure the drugs’ placement on a list (formulary). PBMs have notoriously leveraged formularies to give greatest access to the drugs that pay the PBMs the largest rebates, leaving less expensive drugs off-limits to consumers.

A recent Senate Finance Committee report found that rebates to PBMs have significantly increased since 2013 (some as high as 70 percent). But these discounts fail to lower the patients’ out-of-pocket costs for necessary treatments, such as insulin. For one product, the manufacturer offered the PBM a 56 percent rebate – which means more than half of the savings for insulin are going to a company that doesn’t even make the lifesaving medication.

Insulin is expensive. Forbes recently reported that newer versions cost patients between $175 and $300 a vial. The story points out diabetes patients need multiple vials, the cost of which add up quickly; the total annual value of rebates and discounts for PBMs is likely to be more than $5,000 per patient. As a result, consumers lose, paying more than many of them can afford for lifesaving drugs.

Another way PBMs profit is by avoiding competition, which would drive value and savings for consumers. Three main PBMs accounted for about 60 percent of all U.S. prescription claims in 2019. And when it comes to insulin, with so few industry players, it’s no surprise that consumers again find themselves on the losing end.

We’re pleased to see that some policymakers in the states are taking steps to address these issues. In New Jersey, the state is shaking things up by creating alternatives to how it contracts with PBMs — which is, in turn, increasing competition and benefitting consumers. New Jersey residents are saving  a bundle (to the tune of $2.5 billion over five years).

In New Hampshire, a recent study shows that the state can expect to save an estimated $17.8-$22.2 million annually thanks to legislation that will utilize a similar competitive PBM contract process.

While this is encouraging news, there is still more work to be done to bring to light the role of PBMs. Policymakers need to step in to ensure PBMs deliver savings to patients as they were originally intended to do. We’re encouraging state and federal action to review the role PBMs play in driving up costs and to address the many loopholes they use to increase profits.

Consumers — not PBMs — should come first at the pharmacy counter. Reach out to your elected officials. Share this story on social media to help raise awareness. And stay tuned as we continue the conversation.

Consumers face an unfair disadvantage at the pharmacy counter

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By Sally Greenberg, NCL Executive Director

Everywhere we turn these days, we find ourselves wondering if we are getting a fair deal. Americans continue to suffer the economic consequences of a year-long global health pandemic, and many of us are trying to stick to the essentials and stretch our dollars where we can. As COVID-19 has reminded us, there aren’t many issues families face that are more significant than access to health care.

Families can’t go without essential prescriptions and often wonder why the price seems to go up each time they go for a refill. In fact, we are likely paying more than necessary at the pharmacy counter, but we don’t often know — or even think to ask — why.

A variety of factors drive drug costs, some of which are obvious: the cost of research and development, distributing the product, the pharmacies’ profits – but there is one far less known cause of price increases: PBMs, short for pharmacy benefit managers.

Most people have never heard of PBMs, and PBMs like it that way. They are billion-dollar companies that control more than 80 percent of the prescription drug formularies, (formularies are the lists of drugs that a health plan allows its members to access) — in the United States.

Because of their outsized role, too often PBMs determine how much consumers, businesses, government agencies, and others pay for medicines. As originally conceived, PBMs were meant to help ensure that patients get a fair deal by:

  • working with manufacturers to ensure rebates (or savings) for medications
  • working with insurance companies to determine which medications are covered
  • working with pharmacies to set the price points and help reimburse pharmacies for dispensing prescriptions.

In theory, PBMs should be lowering costs for everyone. However, as they have evolved and grown, they’ve become greedy and self-serving entities, scooping up discounts for themselves and throwing consumers under the bus. All the while, their profits continue to soar as they are all among the top Fortune 500 companies.

Sadly, PBMs have also found ways to manipulate the system and put their own profits first.

Insulin is a prime example. Diabetes patients who need their medication to survive are increasingly left with fewer options for treatment. When PBMs get involved, consumer costs increase.

One recent analysis found that the total value of rebates and discounts for insulin on an annual basis amounts to more than $5,000 per patient. Another report explained that the net price on one insulin product — what the company earns as revenue — declined by 53 percent since 2012, while the list price increased 141 percent. As the WSJ story explains, this is in part due to PBM middlemen meddling. In order to ensure formulary positions (which PBMs control), companies are paying more and more each year.

Consumers don’t know where high drug prices come from and they shouldn’t have to — the system needs to deliver affordable, accessible, safe and effective medications without any entities taking an unfair or hidden profit. The stakes are too high as we look ahead to the health challenges that millions face with the Covid pandemic.

NCL joins with many other groups, including America’s Agenda, United Food and Commercial Workers International Union, HMC Healthworks, Union of Bricklayers and Allied Craftworkers, National Community Pharmacists Association, National Alliance of State Pharmacy Associations, Diabetes Leadership Council, and Diabetes Patient Advocacy Coalition in helping to expose hidden, and frankly, indefensible profits being directed to the coffers of PBMs — money that should be redirected to bring drug prices down for patients and consumers.

Let’s all ask hard questions about PBMs’ role in our healthcare system and whether we can’t be using the profits they are taking to lower drug costs. Share this story with others. Talk with your friends and family. Ask your local pharmacist questions.

Consumers – not PBMs — should come first at the pharmacy counter. Stay tuned for more from us on this, and let’s continue the conversation.

NCL encourages HHS nominee Becerra to continue efforts to help lower consumer out-of-pocket costs at the pharmacy counter

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March 1, 2021
Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 or Taun Sterling, tauns@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League is encouraging the Department of Health and Human Services (HHS) nominee Xavier Becerra to continue critical efforts to help drive down consumer out-of-pocket costs of medicines at the pharmacy counter.

Last week, Becerra testified before the Senate HELP Committee as his confirmation hearings were underway. If confirmed, Becerra would play a critical role in helping consumers pay no more than necessary for the medications they need by addressing the role pharmacy benefit managers (PBMs) play in determining what consumers pay and why.

NCL Executive Director Sally Greenberg weighed in with the following statement:

“PBMs have repeatedly promised to lower costs for patients, but unfortunately we’ve not seen this in action. When it comes to prescription drug access and affordability, we should all be on the side of consumers, rather than middlemen corporations. The challenges posed by COVID-19 serve as a daily reminder of the importance of standing up for individuals and families that don’t have the knowledge or patience to understand why they’re subjected to PBM schemes. If confirmed, Attorney General Becerra will have the opportunity to continue working on this issue and helping to ensure PBMs uphold their promise to consumers. Everyone in the health care system needs to work to reduce costs for consumers, who are burdened by high costs across the board. We look forward to joining with him to get to the heart of why out-of-pocket costs are rising and, most importantly, what can be done about it.”

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.
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National Consumers League calls on Administration to swiftly address PBMs’ role in diving up drug costs

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For immediate release: February 3, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 or Taun Sterling, tauns@nclnet.org, (202) 207-2832

Washington, DC—Washington, DC – The National Consumers League encourages the Biden Administration to continue work on meaningful reforms that help drive down consumer out-of-pocket costs of medicines. The Department of Health and Human Services (HHS) Monday announced the decision to delay a final rule on pharmaceutical rebates that would address critical issues in our healthcare system. The rule aims to lower out-of-pocket costs for consumers by eliminating anti-kickback safe harbors for drug rebates and offering them as direct-to-consumer discounts.

As HHS has demonstrated, the rebates, discounts, and fees negotiated between pharmaceutical companies and pharmacy benefit managers (PBMs) are rarely used to lower consumer out-of-pocket costs for medications. According to the new Senate Finance Committee report, some PBMs receive as much as 70 percent of insulin’s list price—demonstrating that PBMs can increase their profits when list prices are higher. By passing PBM rebates along to patients, savings at the pharmacy counter could be significant.

The following statement is attributable to NCL Executive Director Sally Greenberg:

This delay is a major and preventable setback for consumers. We could be one step closer to significantly lowering out-of-pocket costs, but the government has delayed action. As we continue to face a global pandemic and economic challenges, it’s absolutely essential that we put the interests of consumers above all else—including PBMs.

“We must fix our broken drug pricing process, and HHS has identified one major flaw. The discounts these manufacturers offer to PBMs aren’t passed along to consumers as they should be. And PBMs continue to increase their fees, driving costs up even further. This rule would ensure that consumers—not large, corporate PBMs—save money on the medications they need.

Consumers deserve better, and NCL is committed to encouraging meaningful PBM reforms as soon as possible.

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

CMS Proposed Rule Ignores Data & Bipartisan Support for the Value of Copay Assistance Programs

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By NCL Director of Health Policy Jeanette Contreras

Americans love getting a discount. As consumers, we like to shop to save without compromising the quality of the products we buy. But in healthcare, the stakes are higher at the checkout counter. Patients not only want a discount, they depend on it to afford necessary, sometimes lifesaving, medication to treat their health condition.

Despite what we know about the value and impact of copay assistance programs, a new policy from the Centers for Medicare & Medicaid Services (CMS) could put a barrier between these critical programs and the patients who need them most.

Manufacturer copay assistance programs include discounts, coupon cards, and vouchers which many of our friends, family members, and neighbors use to afford their prescriptions. Studies have shown that without these financial support systems, many patients couldn’t afford their medicines.

The CMS proposal, which has yet to be finalized, would require manufacturers to guarantee that this assistance goes directly to patients—and if manufacturers do not, they would be required to include the value of the copay assistance in Medicaid Best Price and Average Manufacturer Price (AMP) calculations. That would be fine but there’s a  problem.

CMS has a separate policy that was already finalized earlier this year: the Notice of Benefit and Payment Parameters (NBPP) Rule for 2021. In part, the NBPP allows health insurance companies and pharmacy benefit managers (PBMs) to use policies that stop copay assistance from counting towards a patient’s out-of-pocket burden—sometimes called copay accumulator adjustment programs.

NCL criticized HHS for permitting health plans to use these so-called copay accumulator adjustment programs.

“Removing this cost-sharing assistance will force those patients to pay thousands of dollars more in unexpected costs at the pharmacy. These new costs could push some to forego those medications, leading to worsened health outcomes. This could compromise medication adherence and will lead to increased health care costs over time.” – NCL Executive Director Sally Greenberg

Separate studies conducted by the Centers for Disease Control and Prevention (CDC) and IQVIA show that out-of-pocket costs can contribute substantially to reduced adherence or to patients not taking their medication altogether. This is counterproductive because if patients do not take their meds as directed, it means higher costs in other parts of the healthcare system stemming from increased hospitalizations, ER visits, and long-term health issues.

If the data doesn’t convince CMS, voters should. Weeks before the presidential election, we can clearly see widespread support for the value of copay assistance regardless of political affiliation. According to a new National Hemophilia Foundation national survey, more than 80 percent of registered voters believe the government should require copay assistance to be applied to patients’ out-of-pocket costs. Even lawmakers agree that CMS should stop this policy before it launches. A bipartisan group of 36 members of the U.S. House of Representatives sent a letter to CMS urging the agency to not finalize the “contentious line extension section or the Medicaid best price change as currently defined in the notice of proposed rulemaking.”

Clearly, copay assistance is critical to Americans. We hope CMS reevaluates the potentially harmful consequences of this new rule on patients and pulls back this counterproductive proposal.